Kim Jarvis: Building a great IHT strategy with a gift and loan trust

It allows clients full access to their capital, to ease the worry of unforeseen circumstances, while preventing the potential inheritance tax (IHT) liability on the capital increasing. It is IHT neutral at the outset as the asset of the trust - apart from the initial gift of £10 - is the loan. Since it is repayable on demand, the loan to the trustees is not a transfer of value (and so does not impact on subsequent arrangements). If the trust is discretionary, however, there may be potential periodic and exit charges if the growth exceeds the nil rate band available to the trust. For l...